--- title: "China targets Nvidia with antitrust probe, escalates US chip tensions" description: "China said on Monday it has launched an investigation into Nvidia over suspected violations of the country's anti-monopoly law, in a move widely seen as a retaliatory shot against Washington's latest curbs on the Chinese chip sector." type: "NewsArticle" publisher: "Daily Maverick" site: "https://www.dailymaverick.co.za" section: "International Finance" author: "Reuters" author_url: "https://www.dailymaverick.co.za/author/reuters/" canonical_url: "https://www.dailymaverick.co.za/article/2024-12-10-china-targets-nvidia-with-antitrust-probe-escalates-us-chip-tensions/" published: "2024-12-10T00:30:56" updated: "2024-12-10T00:30:57" lang: "en-ZA" word_count: 541 --- # China targets Nvidia with antitrust probe, escalates US chip tensions > China said on Monday it has launched an investigation into Nvidia over suspected violations of the country's anti-monopoly law, in a move widely seen as a retaliatory shot against Washington's latest curbs on the Chinese chip sector. By Reuters · Published 10 December 2024, 02:30 SAST · Updated 10 December 2024, 02:30 SAST ## Key points - In a move reminiscent of a high-stakes chess game, Beijing has launched an investigation into Nvidia's acquisition of Mellanox, just as the US tightens its grip on tech exports, leaving the chip giant caught between a rock and a hard place—or, more aptly, between two superpowers with a penchant for semiconductor skirmishes. - Beijing launches an anti-monopoly probe into Nvidia, focusing on its Mellanox acquisition compliance. - The investigation follows the US's recent chip export restrictions targeting China's semiconductor industry. - Nvidia's market share in China has dwindled amid escalating US-China tensions and increased domestic competition. - Analysts suggest the probe may have limited immediate impact, as Nvidia's advanced chips are already restricted from China. ## Content - Beijing says it is also probing Nvidia over Mellanox deal - Move comes days after the US' latest chip curbs - Nvidia has been caught up in US-China frictions The statement from the State Administration for Market Regulation (SAMR) announcing the probe did not elaborate on how the US company, known for its artificial intelligence (AI) and gaming chips, might have violated China's anti-monopoly laws. It said the US chipmaker is, in addition, suspected of violating commitments it made during its acquisition of Israeli chip designer Mellanox Technologies under terms outlined in the regulator's 2020 conditional approval of that deal. Nvidia did not immediately respond to a request for comment. The company's shares fell 2%. The investigation comes after the US last week launched its third crackdown in three years on China's semiconductor industry, which saw Washington curb exports to 140 companies, including chip equipment makers. "It's (the probe) unlikely to have much of an impact on the company, particularly in the near term, because most of Nvidia’s most advanced chips are already restricted from being sold into China," said Bob O'Donnell, chief analyst at TECHnalysis Research. In a sign that China intends to fight back strongly against the latest move, shortly after Washington's announcement Beijing [banned exports](https://www.reutersconnect.com/all?search=all%3AP8N3LX0A6&linkedFromStory=true) to the United States of the critical minerals gallium, germanium and antimony. On the same day, four of the country's top industry associations issued a rare and coordinated response saying that Chinese companies should be wary of buying US chips as they were "[no longer safe"](https://www.reutersconnect.com/all?search=all%3AP8N3LQ05M&linkedFromStory=true) and buy locally instead. Nvidia has been one of the many companies caught up in the US-China frictions. An earlier round of export curbs by the US topped Nvidia from selling its most advanced AI chips to China, prompting it to come up with new China-specific versions that were compliant with US export controls. "It's clear that the Chinese government is trying to react against recent restrictions from the US. but their ability to impact the US semiconductor industry continues to decrease over time," O'Donnell said. Nvidia dominated China's AI chip market with a more than 90% share before these curbs. However, it currently faces increasing competition from domestic rivals, chief among them being Huawei. China accounted for around 17% of Nvidia's revenue in the year to the end of January, sliding from 26% two years earlier. In 2020, the company won a key approval from China for its acquisition of Mellanox Technologies, despite concerns that Beijing could block the deal due to US-China trade frictions. Beijing's approval set multiple conditions for Nvidia and the merged entity's China operations, including prohibitions on forced product bundling, unreasonable trading terms, purchase restrictions and discriminatory treatment of customers who buy products separately. The last time China launched an anti-monopoly probe into a high-profile foreign technology firm was in 2013 when it investigated Qualcomm's local subsidiary for overcharging and abusing its market position in wireless communication standards. Qualcomm later agreed to pay a [fine of $975 million](https://www.reutersconnect.com/all?search=all%3AKBN0LD2EL&linkedFromStory=true), which at the time was the largest China had ever handed out to a company. (Reporting by Liam Mo, Yukun Zhang and Ryan Woo; Additional reporting by Zaheer Kachwala in Bengaluru; editing by Jason Neely, Louise Heavens, Susan Fenton and Pooja Desai)